The usefulness of average cost-effective ratios

Abstract

We demonstrate that average cost-effectiveness ratios (CERs) play an important role in the evaluation of the cost-effectiveness of treatments. Criticisms of the usefulness of CERs derive mostly from the context of resource allocation under a constrained budget in which some decisions are based on incremental CERs. However, we show that in many cases, these decision rules are equivalent to decision rules on CERs. This follows for mutually exclusive treatments first, because a treatment is eliminated by extended dominance if and only if there is a mixed treatment with a smaller CER, where the mixing parameter lies in a certain interval. Second, after elimination of treatments by dominance and by extended dominance, resources can be allocated in order of increasing CERs. Moreover, the CER is a parameter that characterizes clinical and economical properties of a treatment independent of its comparators.